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June 13, 2012 at 8:11 AM in reply to: My next door neighbor was a cop, still under 60, been retired for more than 5 yrs #745574June 13, 2012 at 7:44 AM in reply to: My next door neighbor was a cop, still under 60, been retired for more than 5 yrs #745571
SK in CV
Participant[quote=sdrealtor]What is a public DROP program and why would I be envious of one?[/quote]
Deferred Retirement Option Program, various programs have been adopted across the country to encourage early retirement of employees with >20 years of service. (I think the SDPD program requires more than 25 years of service.) The programs usually require actual retirement within 2 years of entering the program, with some combination of increased current and/or retirement benefits, but sometimes with immediate termination of future increases in benefits. For many employees it ends up being work less and get more. For employers, it theoretically saves money because older workers are replaced with younger employees with materially lower annual pension costs.
June 13, 2012 at 7:15 AM in reply to: My next door neighbor was a cop, still under 60, been retired for more than 5 yrs #745568Participant[quote=CA renter]
One huge problem with this debate is that people are conflating (what I would call) the abuse of public pensions and honest DB retirement plans in the public sector.
I don’t think anyone here would defend pension spiking, abuse of disability benefits, etc. We need to separate the debate about abuse (because there is no debate there…it is wrong) from the debate about public sector compensation and benefits.
Also, you need to do more research on the DROP program. Most public employers use it because it **saves** them money. The arguments against it are more envy-based than rational, OR people are against it because they don’t actually understand how it works or why it exists.[/quote]
These are very insightful observations. They are supportive of my kind of evolving theory on how people formulate political opinions. Some people look at the whole, and others base opinions on exceptions. It seems to apply to a pretty broad spectrum of topics in the political landscape.
DB pension plans are bad because some people game the system.
Unemployment benefits and welfare benefits are bad because some people don’t really want to work.
Abortion is bad because it is sometimes used purely as a method of birth control.
Mortgage principle writedowns are bad because some people entered into mortgage contracts based on false information and/or with full knowledge that they could never make the payments.
Of course all of these assertions are true, yet all of them probably represent minority exceptions. Some people will formulate their opinions based on these minority exceptions, others based on the issues taken as a whole.
Just to clarify, I’m not arguing that these exceptions in public pension schemes are the only factor used to formulate opinions, just that it is representative of this evolving theory of opinions based on exceptions.
Specifically related to the various public DROP programs, I think your observation that opposition may be envy-based is spot on. I’m not sure there’s any way to prove that it is so. Yet I strongly suspect it’s true.
June 12, 2012 at 8:55 AM in reply to: My next door neighbor was a cop, still under 60, been retired for more than 5 yrs #745529Participant[quote=harvey]
I’m not really following what you are saying about risk here. You do understand pensions are invested in the stock market also? They also carry risk. That’s the primary reason we have a public-sector pension crisis.[/quote]
Why yes, of course you’re right. The primary reason for the percieved pension crisis has little do to with over-compensated public employees. It’s not out of control benefits. It’s not greedy public employees stealing from the public.
It’s the once a century crash of the financial markets. Save for that, there wouldn’t be a peep about under-funded retirement plans. Nobody would be talking about slashing retirement benefits.
Interesting that after all this vitriolic back and forth, you’ve come full circle to the same conclusion that at least a handful of us have suggested was the real crisis with public pensions many months ago.
June 9, 2012 at 7:35 AM in reply to: My next door neighbor was a cop, still under 60, been retired for more than 5 yrs #745362Participant[quote=flu]Whoohoo… Page 7….
I have to ask…..What would Dr. Paul do?[/quote]
Buy gold.
June 8, 2012 at 8:23 AM in reply to: My next door neighbor was a cop, still under 60, been retired for more than 5 yrs #745309Participant[quote=harvey]Ok, so SK has opted not to address the core issue at all (and continues to claim “victory” by nit-picking minor details.)
And just to set the record straight. Everybody here will have to wait till age 65 (and most till age 67) to collect full SS benefits:
http://www.socialsecurity.gov/retire2/agereduction.htm
So if is there no difference between public and private sector, why is all of this going on?
http://online.wsj.com/article/SB10001424052702303918204577449410119033138.html?mod=googlenews_wsj
[…] voters in San Diego approved a ballot measure that will place all newly hired city workers, except police officers, into a 401k retirement plan.
So, according to SK’s claims, the ballot initiative changes nothing, since 401Ks and pensions are all the same (but I wonder why the unions have been so vigorously fighting it…)
Anybody else want to try answering the question?
Why should the pubic-sector be paid in a drastically different form than the private sector?[/quote]
Really? The results of this vote PROVES that public sector employees are paid differently than private sector employees? I didn’t see that anywhere in the law. Maybe you can point to where it says that.
And while you’re at it, you could clear up your lie about what I said. I never said the ballot initiative changes nothing. I never said that 401Ks and pensions are the same. Does those lies really further your argument?
And nice job changing the subject on the SS benefits. Just to repeat, earlier you said that workers have to wait until 67 to collect social security. When the truth is, no one will have to wait until 67 until 2027. Are we talking about pensions today or pensions 15 years from now?
June 8, 2012 at 7:16 AM in reply to: My next door neighbor was a cop, still under 60, been retired for more than 5 yrs #745306Participant[quote=harvey][quote=SK in CV]One thing that hasn’t been mentioned anywhere that I noticed, is that many (most?) public employees aren’t covered by Social Security. I know SD cops aren’t. So when we’re comparing that $50K a year pension or $100K a year pension, compared to a private industry employee 401K, an adjustment of $15 to $20K a year for social securty has to be made. [/quote]
It has already been mentioned, as stated above.
Plus SS doesn’t start until 65 (or 67 for many) – a difference of up to 17 years after some public-sector pensions.
What really hasn’t been mentioned here is your answer to the core question: Why should the pubic-sector be paid in a drastically different form than the private sector?
Thus far, we’ve only heard implied arguments based on small technicalities, e.g “cops don’t get social security”, “pensions and 401Ks are really the same because they are ‘deferred'”
Can you provide an answer to the question above – an answer that actually addresses the issue?[/quote]
Wrong. Social Security can start as early as 62 for retirees. And nobody has had to wait until 67 to collect full benefits.
Answer to your question. They’re not.
June 7, 2012 at 8:47 PM in reply to: My next door neighbor was a cop, still under 60, been retired for more than 5 yrs #745286ParticipantOne thing that hasn’t been mentioned anywhere that I noticed, is that many (most?) public employees aren’t covered by Social Security. I know SD cops aren’t. So when we’re comparing that $50K a year pension or $100K a year pension, compared to a private industry employee 401K, an adjustment of $15 to $20K a year for social securty has to be made.
And paramount, you can drop the talk of the Vernon guy. He’s not getting his $540K a year anymore. It was a mistake.
Participant[quote=briansd1]Not a big loss as far as I’m concerned. I think that foie gras can still be made under humane conditions but it’ll cost much more.
I prefer pâté de campagne.[/quote]
There’s a more humane way to force feed a duck? Using a clean rubber hose instead of a dirty metal pipe doesn’t seem to make it any more humane.
I’m kind of agnostic about this whole thing. I eat meat, but my kids don’t. I think it’s only marginally more humane to eat a cow that’s been shot in the head, than a duck that’s been force fed before slaughtering. I don’t really like to think about that process for either one. Though I’ve never had foie gras. I suspect it’s pretty tasty.
Participant[quote=flyer]
IMHO, helping your kids find their chosen path in life is probably the best way to “spoil” your kids, and the greatest gift you can give
them–and yourself. At least it worked for us.[/quote]Agree entirely with this. Agree with the unquoted part too, but this in particular is spot on.
June 6, 2012 at 3:21 PM in reply to: My next door neighbor was a cop, still under 60, been retired for more than 5 yrs #745178Participant[quote=harvey]You responded with the semantic and legal nitpick that I predicted in my previous post.
And you are dancing around the issue, which I said – and you know – is the deferred obligation that is at the core of pension programs.
If you really want to discuss these issues as if you know what you are talking about, quit focusing on irrelevant semantic details and make an attempt address the crux of the issue.[/quote]
I responded with exactly what you asked for. You suggested that all deferred comp plans needed to be stopped. I asked if you were aware that 401K’s are deferred comp plans. You then redefined deferred comp. I told you that definition was innacurate. You asked for the correct definition, and the same time repeating your incorrect definition. You know know what deferred compensation means. Words are important. Semantics are not irrelevant.
June 6, 2012 at 1:57 PM in reply to: My next door neighbor was a cop, still under 60, been retired for more than 5 yrs #745171Participant[quote=harvey]Seriously?
That’s your argument?
Since you are so wise, please explain to us what deferred compensation is.
Explain to me how money sitting in my 401K is “deferred”.
And before you nit-pick semantics, the issue is not the deferred compensation of the employee , it’s the deferred obligation of the employer/taxpayer.
You haven’t added a single fact or insight to this discussion, just an anecdote about a family member and a bunch of passive-aggressive questions.
Lame.[/quote]
Deferred comp is pay you don’t get today. Despite what you might think, you are not the owner of money in your 401K plan. The plan trustee is. And that is both as to the pay you elected to “defer” from you paycheck, any growth on that money and any employer matching. Your employer funds the “deferred part of you pay concurrent with you getting paid (or close to it), but may not have to fund the matching part until next year. It’s still NOT your money. The plan trustee owns the money.
If you really want to discuss these issues as if you know what you’re talking about, learn what the terms mean.
June 6, 2012 at 12:53 PM in reply to: My next door neighbor was a cop, still under 60, been retired for more than 5 yrs #745162Participant[quote=harvey][quote=SK in CV]Umm….401K’s (and similar plans) are deferred comp plans too. Pretty simple. Lower unknowns, though not necessarily lower cost. Are they inherently doomed to failure too?[/quote]
There is nothing “deferred” about a 401K except the taxes. Money goes in the account each pay period and belongs to the employee. It is their money and even goes with them if they leave the employer.
Lower cost? Depends upon the manager, but there’s no reason a passively managed account should not be much cheaper, and actively managed funds should cost the same as CalPERS. If someone wants a more sophisticated investment product, like an annuity, that’s their choice and they bear the costs (not the employer/taxpayer.)
Lower unknowns? 401Ks have zero unknowns for the employer (or taxpayer) as the amount is paid in full with each paycheck. The unknowns for the employee are no different than any other investment.
I’ll answer your final, insincere question even though you know this: 401Ks are not doomed to failure like defined benefits because they don’t really have any unknowns distinct from other ordinary investments and – more importantly – any “failures” to meet a goal are isolated to individuals and not socialized to the general public.[/quote]
Nevermind. You don’t know what deferred compensation means.
This is what happens when people attack problems that they don’t understand.
June 6, 2012 at 10:48 AM in reply to: My next door neighbor was a cop, still under 60, been retired for more than 5 yrs #745148Participant[quote=harvey][quote=SK in CV]Why are they only temporary solutions?[/quote]
I answered the question already. Simply tweaking the defined benefit parameters is a short term fix that does not address the crux of the problem.
The problem is deferred compensation. Period.
Any plan of deferred compensation will eventually fall prey to corruption and mismanagement. Deferred compensation is basically debt, and those making the promises are not the ones on the hook to pay it when it comes due. In theory it is possible to set aside enough assets to cover the obligations, but history has shown that these systems are far too prone to failure.
And what’s the point anyway? There’s an equally fair alternative that is not prone to massive failures: Pay people a fair wage at the time that services are provided. If a cop is worth $100/hour, then pay them $100/hour, give them an opportunity to invest some of that tax free for retirement, and be done with it. There’s no need to pay them $60/hour now and agree to some other amount in the future, and then hope that the money is really there thirty years from now.
The rest of the world lives just fine with this system, why should public employees be any different?
The pension system is ridiculously over-complicated and in inherently prone to becoming more complicated over time. Turning a few dials on this Rube Goldberg contraption to get it back to working order will only solve the problem until the next round of union negotiations comes along.[/quote]
Umm….401K’s (and similar plans) are deferred comp plans too. Pretty simple. Lower unknowns, though not necessarily lower cost. Are they inherently doomed to failure too?
June 6, 2012 at 7:55 AM in reply to: My next door neighbor was a cop, still under 60, been retired for more than 5 yrs #745129Participant[quote=harvey]The solution outlined above does have some good ideas, but they are only temporary solutions, at best.
[/quote]
Why are they only temporary solutions?
The plan outlined seems pretty reasonable, and every change outlined (with the exception of pay cuts) represents a permanent improvement. In total, they may not be sufficient to eliminate state and municipal deficits, but which of them is temporary?
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